The cult of friendly URLs

URL design is really important. Important enough that we mustn't let a cult of 'friendly URL' despots screw it up for everybody.

During this discussion I'll sound off about the fundamentals of URL design. Why it should be included upfront as part of the high-level design of the site IA and UX design, and how getting it right helps web-based products successfully fit into the wider ecosystem of the web. How can you optimise URLs for different requirements, such as readability (by humans and machines), shareability, hackability, navigability, etc...?